Napatech A/S

Interim / Quarterly Report • Aug 26, 2025

NAPATECH HALF-YEAR REPORT 2025

MANAGEMENT'S REPORT

We've made significant progress executing against key milestones in our strategic roadmap, reinforcing our position as an early leader in the emerging mass market for Network Interface Cards (NICs). Over the past year, we've strengthened our core business and advanced toward critical design wins that support our goal of scaling to 60,000–80,000 units annually at peak production. These developments are tracking to plan, and compared to this time last year, our position is markedly stronger. Together, these gains enhance our visibility into the timing and magnitude of our transformation—while simultaneously reducing risk across our growth trajectory.

Our second quarter financial results include revenue of \$4.9M US dollars, an increase of 43% year-over-year, that lifts our first-half 2025 revenue above 1H-2024 by 26%. Our 2Q gross margins remained healthy at 67%, up 2% compared to 2Q-2024, at finished 1H-2025 at 68.4%. While we will never be pleased with negative earnings and cashflow, we are pleased to report significant improvements in both of those areas, and to report we foresee further improvements in 3Q-2025. We've also continued our focus on improvements to net working capital, and have begun to see marked results.

In support of the significant steps forward with our current customers and expanding design-win pipeline, Napatech successfully completed a private placement capital raise of 210M NOK. The Placement attracted interest from high-quality investors, including dedicated support from existing shareholders. ABG Sundal Collier ASA (?) and SpareBank 1 Markets AS (?) served as managers for the placement, with SB1 initiating coverage on Napatech. The proceeds will be used to finance the growth opportunity arising from the announced partnerships, pipeline and design wins.

We also were fortune to augment our board of directors with new members holding key executive positions from respected companies, with proven success in with customers in the markers that Napatech is navigating today.

We are inspired by the success we have in building a pipeline for our new products and solutions, that exceeds anything we have had in place from our base business. Our partnership with Intel-Altera continues to play a critical role in our strategy, by helping to contribute to valuable, high-volume opportunities to our pipeline from leading high-growth applications and use cases. In recent updates we had noted our expectation of growth from our base business, and we are pleased to report definitive results in that area, along with improved visibility to additional improvements in the second half of 2025. An important part of that strengthening was the increase in sales to our top customers, along with forecasts and commitments from those top customers for increased unit demand over the next 4 quarters. The improving base business, plus constantly expanding pipeline of opportunities and early success in new design wins provides great optimism towards realizing our growth ambitions

Last year we announced a design win with Intel-Altera and a tie-1 server OEM to build next generation solutions to their specification for high volume use cases, as well as the general market. I am glad to report we consistently met the hardware mileposts ahead of plan and exceeded their expectations. We are intimately involved in the next stage of their process, which includes the development and integration of key software to meet their deployment requirements. We are excited that our efforts to date have resulted in expanding our cooperation to additional use cases and opportunities, all of which represent potentially transformational unit volumes to Napatech.

We are equally excited today to share more information about our latest high-volume design win in Artificial Intelligence inferencing for hyperscale cloud, next-wave cloud, and enterprise datacenters. Our Intel-Altra programmable NIC delivers efficient ultra-low latency distributed inferencing across many AI servers. Customers get the benefit of deploying an industry-standard ethernet-based scale-out solution to take advantage of blazing fast inference speeds, all at massive scale. We are on track with our initial design win, and actively replicating this design by pursuing others in need of AI infrastructure.

Finally, we recently disclosed other winning solutions across an array of applications and services by leading companies in their respective vertical markets, including a cyber security solution with Broadcom Symantec, a Network and Server Infrastructure solution with Eideticom, and Artificial Intelligence solution with Myrtla.AI and Xelera for ultra-low latency transactions in financial services markets. These are all examples of Napatech expanding its business to large or high-growth segments that require our programmable NICs. We're also pleased that one of our 5G Packet Core design wins, has secured their first design win from a north American 5G operator, that is expected to lead to our first production deployment in late 2025.

On behalf of Napatech we thank you for your interest in our business and hope you share our enthusiasm about our future.

Best regards,

Lars Boilesen

Chief Executive Officer

Highlights H1:

• Revenue in USD amounted to 8.2m in H1 2025, an increase of 26% compared to H1 2024. In DKK, revenue amounted to 55.4m, an increase of 24% compared to H1 2024.
• The gross margin in H1 2025 was 68.4%, an increase of 0.2%-points compared to H1 2024.
• Staff costs and Other external costs in H1 2025 amounted to DKK 91.5m compared to DKK 83.9m in H1 2024.
• EBITDAC¹ in H1 2025 amounted to negative DKK 53.6m compared to negative DKK 53.4m in H1 2024.
• EBITDA in H1 2025 amounted to negative DKK 48.7m compared to negative DKK 51.7m in H1 2024.
• Depreciation, amortization, and impairment for H1 2025 were DKK 12.3m compared to DKK 15.6m in H1 2024.
• Net Cash flow from operating activities in H1 2025 was negative DKK 44.3m compared to negative DKK 47.4m in H1 2024.
• Net working capital end of H1 2025 amounted to DKK 95.2m compared to DKK 65.2m end of H1 2024 and DKK 98.6m end of 2024.
• Net cash used in investing activities in H1 2025 amounted to DKK 6.3m compared to DKK 3.7m in H1 2024.
• Cash and cash equivalents at the end of H1 2025 amounted to DKK 133.4m compared to DKK 103.2m at the end of H1 2024.

Highlights Q2:

• Revenue in USD amounted to 4.8m in Q2 2025, an increase of 43% compared to Q2 2024. In DKK, revenue amounted to 31.6m, an increase of 36% compared to Q2 2024.
• The gross margin in Q2 2025 was 67%, an increase of 2%-points compared to Q2 2024.
• Staff costs and Other external costs in Q2 2025 amounted to DKK 42.6m compared to DKK 43.3m in Q2 2024.
• EBITDAC in Q2 2025 amounted to negative DKK 21.5m compared to negative DKK 28.2m in Q2 2024.
• EBITDA in Q2 2025 amounted to negative DKK 19.6m compared to negative DKK 27.4m in Q2 2024.
• Depreciation, amortization, and impairment for Q2 2025 were DKK 5.9m compared to DKK 7.7m in Q2 2024.
• Net Cash flow from operating activities in Q2 2025 was negative DKK 18.6m compared to negative DKK 41.9m in Q2 2024.
• Net cash used in investing activities in Q2 2025 amounted to DKK 2.5m compared to DKK 2.7m in Q2 2024.

	Q2 2025	Q2 2024	YTD 2025	YTD 2024
Revenue USD m	4.8	3.4	8.2	6.5
Growth YoY USD m	43%	-39%	26%	-40%
Revenue DKK m	31.6	23.2	55.4	44.7
Growth YoY DKK m	36%	-39%	24%	-40%
Gross Margin	67%	65%	68%	68%
EBITDAC DKK m	-21.5	-28.2	-53.6	-53.4
EBITDA DKK m	-19.6	-27.4	-48.7	-51.7
Net Cash Flow from Operating Activities DKK m	-18.6	-41.9	-44.3	-47.4
Net Working Capital, end of period DKK m	95.2	65.2	95.2	65.2
Cash and cash equivalents, end of period DKK m	133.4	103.2	133.4	103.2

Key figures² :

This is Napatech

Napatech is a Danish tech company developing high-performance, programmable network interface cards and software for programmable NICs. The Napatech software suite ensures broad compatibility and seamless integration for our family of FPGA-based SmartNICs. With support for all major systems and a common API that easily integrates with custom-developed, open source, or commercial applications, we enable significantly reduced time-to-market for new products.

Additional information is available at www.napatech.com\investor.

¹ EBITDAC: Earnings before depreciation, amortization and impairment, and cost transferred to development projects.

² Definitions: Gross Margin is calculated as 'Gross Profit' / 'Revenue'; EBITDAC is calculated as 'Earnings Before Interest, Taxes, Depreciation and Amortization' before staff costs transferred to capitalized development costs; EBITDA is calculated as 'Earnings Before Interest, Taxes, Depreciation and Amortization'; Net working capital represents the value of inventories, trade receivables of other current operating assets less trade payables and other current operating liabilities. Cash and cash equivalents and income tax receivable or payable are not part of the net working capital; Cash flows from operating activities are profit or loss before tax added or deducted changes in the net working capital, added or deducted changes in provisions and added the yearly depreciation and amortization; Free cash flow is net cash flow from operating activities added or deducted investing activities.

Revenue and Gross Margin

H1

Napatech reports revenue of DKK 55.4m in the first half of 2025 compared to DKK 44.7m in the same period in 2024, equivalent to an increase of 24%. In USD, revenue was up 26% compared to H1 2024.

The gross margin in H1 2025 was 68.4% compared to 68.2% in H1 2024.

Q2

Napatech reports revenue of DKK 31.6m in Q2 2025 compared to DKK 23.2m in the same period in 2024, equivalent to an increase of 36%. In USD, revenue grew 43% compared to Q2 2024.

The gross margin in Q2 2025 was 67% compared to 65% in Q2 2024.

Costs

H1

Staff costs and Other external costsin H1 2025 amounted to DKK 91.5m, compared to DKK 83.9m in H1 2024.

Operating expenses after transferal of staff costs to capitalized development costs in H1 2025 amounted to DKK 86.6m, compared to DKK 82.2m in H1 2024.

Q2

Staff costs and Other external costsin Q2 2025 amounted to DKK 42.6m, compared to DKK 43.3m in Q2 2024.

Operating expenses after transferal of staff costs to capitalized development costs in Q2 2025 amounted to DKK 40.8m, compared to DKK 42.4m in Q2 2024.

EBITDAC and EBITDA

H1

Earnings before Interest, Tax, Depreciation, Amortization, and Capitalization of development cost (EBITDAC) amounted to negative DKK 53.6m in H1 2025 compared to negative DKK 53.4m in H1 2024.

EBITDA in H1 2025 was negative DKK 48.7m compared to negative DKK 51.7m in H1 2024.

Q2

EBITDAC amounted to negative DKK 21.5m in Q2 2025 compared to negative DKK 28.2m in Q2 2024.

EBITDA in Q2 2025 was negative DKK 19.6m compared to negative DKK 27.4m in Q2 2024.

Depreciation, amortization, and impairment

H1

Depreciation, amortization, and impairment in H1 2025 were DKK 12.3m compared to DKK 15.6m in Q2 2024.

Q2

Depreciation, amortization, and impairment in Q2 2025 were DKK 5.9m compared to DKK 7.7m in Q2 2024.

Financial Items

H1

Financial items for H1 2025 were negative DKK 4.0m compared to a negative DKK 0.7m in H1 2024.

Q2

Financial items for Q2 2025 were negative DKK 2.7m compared to a negative DKK 0.7m in Q2 2024.

Taxes

H1

Taxes for H1 2025 amounted to a cost of DKK 0.1m compared to a an income of DKK 0.7m in H1 2024.

Q2

Taxes for Q2 2025 amounted to a cost of DKK 0.1m compared to an income of DKK 0.7m in Q2 2024.

Investments

H1

The total net cash used in investing activities in H1 2025 was DKK 6.3m, of which DKK 5.7m was invested in new product development. In H1 2024, the total net cash used in investing activities was DKK 3.7m, of which DKK 1.9m was invested in new product development.

Q2

The total net cash used in investing activities in Q2 2025 was DKK 2.5m, of which DKK 2.2m was invested in new product development. In Q2 2024, the total net cash used in investing activities was DKK 2.7m, of which DKK 0.9m was invested in new product development.

Cash Flow

H1

Net cash flow from operating activities in H1 2025 was negative DKK 44.3m compared to negative DKK 47.4m in H1 2024.

Free cash flow in H1 2025 amounted to negative DKK 50.6m compared to negative DKK 51.1m in H1 2024.

Net cash from financing activities in H1 2025 was positive DKK 121.6m, compared to positive DKK 111.7m in H1 2024.

Cash and cash equivalents at the end of H1 2025 was DKK 133.4m compared to DKK 103.2m at the end of H1 2024.

Q2

Net cash flow from operating activities in Q2 2025 was negative DKK 18.6m compared to negative DKK 41.9m in Q2 2024.

Free cash flow in the quarter amounted to negative DKK 21.2m compared to negative DKK 44.6m in Q2 2024.

Net cash from financing activities in Q2 2025 was positive DKK 121.1m, compared to a positive DKK 120.2m in Q2 2024.

Changes in equity

The company's equity amounted to DKK 216.6m on June 30, 2025, this is an increase of DKK 63.2m from December 31, 2024. On May 27, 2025, Napatech completed a private placement of 10,000,000 shares at a subscription price of NOK 20.00 per share, raising DKK 130m in gross proceeds.

In H1 2025, Group equity decreased by the comprehensive income with DKK -67.0m and increased with DKK 130.2m by transactions with shareholders.

Shareholders and Share Information

Napatech, as of June 30, 2025, had 110,053,880 shares, each with a nominal value of DKK 0.25. The share capital is DKK 27,513,470.00, divided among the 1,906 shareholders.

	Number of	% of total
Investor	shares
SUNDT AS	13,456,941	12.22%
VERDANE CAPITAL VIII K/S	10,013,618	9.10%
ARBEJDSMARKEDETS TILLAEGSPENSION	7,800,000	7.09%
J.P. MORGAN SE	6,200,738	5.63%
PRIVATE INVESTOR	5,365,065	4.87%
EXTELLUS AS	4,512,992	4.10%
BANK PICTET & CIE (EUROPE) AG	4,286,888	3.90%
BROWNSKE BEVEGELSER AS	4,204,445	3.82%
SKANDINAVISKA ENSKILDA BANKEN AB	3,822,687	3.47%
SKANDINAVISKA ENSKILDA BANKEN AB	3,645,221	3.31%
J.P. MORGAN SE	2,470,548	2.24%
SKANDINAVISKA ENSKILDA BANKEN AB	2,180,828	1.98%
MANARA AS	1,995,573	1.81%
THE BANK OF NEW YORK MELLON SA/NV	1,992,022	1.81%
DANSKE BANK A/S	1,991,343	1.81%
PRIVATE INVESTOR	1,844,840	1.68%
MP PENSJON PK	1,730,790	1.57%
AREPO AS	1,565,200	1.42%
NORDNET BANK AB	1,408,658	1.28%
THE BANK OF NEW YORK MELLON	1,379,749	1.25%
Total number owned by top 20	81,868,146	74.37%
Total 1886 other shareholders	28,185,734	25.63%
Total Number of shares	110,053,880	100%

Events after the end of the period

No significant events have occurred after the end of the reporting period.

Outlook for 2025

Napatech's financial expectations for 2025 remain unchanged:

	Guidance
Revenue	DKK 150 - 190m
Gross margin	69 - 71%
Staff expenses & Other external costs	DKK 170 - 180m
Staff costs transferred to capitalized development costs	DKK 8 - 12m

With performance in the middle of the guided ranges, EBITDA would be negative DKK 46m.

The company is exposed to risks that might affect our ability to reach our goals, such as currency fluctuations, general market uncertainty, and material changes in our large OEMs' needs for Napatech's products.

Additionally, in 2025, we have seen increasing market uncertainty, particularly related to potential trade barriers, including tariff increases in the United States. With our products manufactured in the US and the majority of our customers also located in the US, we do not feel overly exposed. However, the lack of predictability and uncertainty surrounding tariff increases is a concern, and we will be monitoring the development closely.

Disclaimer:

This report may contain statements regarding the future in connection with Napatech's growth initiatives, profit figures, outlook, strategies, and objectives. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from those expressed or implied in such statements.

MANAGEMENT STATEMENT

The Board of Directors and the Executive Management have considered and adopted the interim report of Napatech Group for the period from January 1 to June 30, 2025

The interim report has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the EU, and additional Danish interim reporting requirements for listed companies.

In our opinion, the interim report gives a true and fair view of the Group's assets, liabilities, and financial position on June 30, 2025, and of the results of the Group's operations and cash flows for the period January 1 to June 30, 2025.

We find that the Management's commentary provides a fair statement of developments in the activities and financial situation of the Group, financial results for the period, and the general financial position of the Group, and describes the major risks and elements of uncertainty faced by the Group. The term Company below refers as well to the Group.

The interim report is unaudited and has not been reviewed by the company's auditors.

Søborg, August 26, 2025

Executive Management

Lars Boilesen, CEO

Board of Directors

Christian Jepsen, Chairman Lynn A. Comp

Svenn Tore Larsen Zane Ball

Patricia Kummrow Shannon John Poulin

INCOME STATEMENT

For the period ended June 30, 2025

		2nd quarter		H 1
DKK'000	Note	2025	2024	2025	2024
R evenue	3	31,571	23,176	55,420	44,718
Cost of goods sold		(10,445)	(8,105)	(17,523)	(14,217)
Gross profit		21,126	15,071	37,897	30,501
Staff costs		(29,443)	(28,581)	(64,502)	(56,339)
Other external costs		(13,165)	(14,726)	(27,011)	(27,562)
EBITDAC		(21,482)	(28,236)	(53,616)	(53,400)
Transferred to capitalized development costs		1,843	867	4,926	1,716
EBITDA		(19,639)	(27,369)	(48,690)	(51,684)
Depreciation, amortization and impairment		(5,870)	(7,699)	(12,327)	(15,643)
Operating result (EBIT)		(25,509)	(35,068)	(61,017)	(67,327)
Finance income		182	373	209	1,206
Finance costs		(2,907)	(1,112)	(4,241)	(1,869)
R esult before tax		(28,234)	(35,807)	(65,049)	(67,990)
Income tax		(100)	747	(94)	745
R esult for the period		(28,334)	(35,060)	(65,143)	(67,245)

			H 1
Earnings / (loss) per share:	4	2025	2024
Basic, DKK		(0.64)	(0.73)
Diluted, DKK		(0.64)	(0.73)

STATEMENT OF COMPREHENSIVE INCOME

For the period ended June 30, 2025

	H 1
DKK'000	2025	2024
Result for the period	(65,143)	(67,245)
Items that may be reclassified to profit and loss in subsequent periods:
Exchange differences on translation of foreign operations	(1,835)	400
Other comprehensive income after tax	(1,835)	400
Total comprehensive income	(66,978)	(66,845)

CASH FLOW STATEMENT

CASH FLOW STATEMENT For the period ended June 30, 2025
	2nd q	uarter	H 1
DKK'000	2025	2024	2025	2024
Op erating activities
Income/Loss before tax	(28,234)	(35,807)	(65,049)	(67,990)
Ad justments to reconcile p rofit b efore tax to net cash flows
Finance income	(182)	(373)	(209)	(1,206)
Finance costs	2,907	1,112	4,241	1,869
Depreciation, amortisation and impairment	5,870	7,699	12,327	15,643
Share-based payment expense	2,049	2,693	4,815	4,707
Working cap ital ad justments
Change in inventories	15	3	(4,994)	(17,342)
Change in trade and other receivables and prepayments	478	(11,881)	3,006	14,775
Change in trade and other payables and contract liabilities	(870)	(4,434)	2,694	3,477
Interest received	182	201	209	266
Interest paid	(754)	(1,072)	(1,253)	(1,495)
Income tax received, net	(104)	(79)	(104)	(80)
Net cash flows from op erating activities	(18,643)	(41,938)	(44,317)	(47,376)
Investing activities
Purchase of tangible assets	(248)	(1,740)	(555)	(1,740)
Investments in intangible assets	(2,232)	(896)	(5,671)	(1,905)
Investments in leasehold deposits	(56)	(46)	(56)	(46)
Net cash used in investing activities	(2,536)	(2,682)	(6,282)	(3,691)
F ree cash flow	(21,179)	(44,620)	(50,599)	(51,067)
F inancing activities
Capital increase	129,943	144,671	130,243	144,791
Transaction costs on issue of shares	(4,874)	(5,188)	(4,874)	(5,188)
Increase (decrease) through treasury share transactions	-	-	-	1,491
Payment of financial lease liabilities	(678)	(873)	(1,587)	(1,746)
Proceeds from borrowings	(1,144)	-	-	-
Repayment of borrowings	(2,185)	(18,449)	(2,185)	(27,621)
Net cash flows from financing activities	121,062	120,161	121,597	111,727
Net change in cash and cash eq uivalents	99,883	75,541	70,998	60,660
Net foreign exchange difference	(1,070)	147	(1,928)	179
Cash and cash equivalents at the beginning of the period	34,598	27,518	64,341	42,367
Cash and cash eq uivalents at the end of the p eriod	133,411	103,206	133,411	103,206

BALANCE SHEET

ASSETS

		30 June	31 Dec.	30 June
DKK'000	Note	2025	2024	2024
Development projects, completed		10,516	19,764	24,804
Development projects, in progress		9,940	4,269	4,131
Patents		855	1,042	1,424
Intangible assets	5	21,311	25,075	30,359
Plant and equipment		4,005	4,765	4,146
Right-of-use assets		7,840	9,200	6,250
Leasehold improvements		487	441	378
Tangible assets	6	12,332	14,406	10,774
Leasehold deposits		1,643	1,587	1,587
Other non-current assets		1,643	1,587	1,587
Non-current assets		35,286	41,068	42,720
Inventories	7	74,870	69,876	52,914
Trade receivables		18,051	19,381	19,193
Prepayments		4,525	5,153	3,594
Other receivables		19,814	23,762	19,461
Income tax receivable		6,253	6,345	6,729
Cash and cash equivalents		133,411	64,341	103,206
Current assets		256,924	188,858	205,097
Total assets		292,210	229,926	247,817

EQUITY AND LIABILITIES

	30 June	31 Dec.	30 June
DKK'000 Note	2025	2024	2024
Share capital 8	27,513	24,999	24,904
Share premium	606,169	483,062	481,025
Treasury shares 9	(619)	(619)	(619)
Foreign currency translation reserve	(1,282)	553	129
Share-based payment reserve	23,468	18,946	14,555
Retained earnings	(438,619)	(373,518)	(329,515)
Equity	216,630	153,423	190,479
Interest-bearing loans and borrowings	5,929	6,806	8,223
Other non-current financial liabilities	4,624	4,540	4,571
Non-current lease liabilities	5,000	6,406	3,225
Non-current contract liabilities	2,058	1,550	3,306
Non-current liabilities	17,611	19,302	19,325
Interest-bearing loans and borrowings	34,706	36,098	8,123
Current lease liabilities	3,214	3,124	3,275
Trade payables	5,247	5,789	8,277
Other payables	11,438	8,953	11,048
Contract liabilities	3,364	3,237	7,290
Current liabilities	57,969	57,201	38,013
Total liabilities	75,580	76,503	57,338
Total equity and liabilities	292,210	229,926	247,817

STATEMENT OF CHANGES IN EQUITY

	Share	Share	Treasury	Foreign currency translation	Share based payment	Retained	Total
DKK'000	capital	premium	shares	reserve	reserve	earnings	equity
2025
Equity at January 1	24,999	483,062	(619)	553	18,946	(373,518)	153,423
Result for the period	-	-	-	-	-	(65,143)	(65,143)
Total other comprehensive income	-	-	-	(1,835)	-	-	(1,835)
Total comprehensive income for the period	-	-	-	(1,835)	-	(65,143)	(66,978)
Transactions with shareholders
Issue of shares	2,514	127,729	-	-	-	-	130,243
Transaction costs	-	(4,874)	-	-	-	-	(4,874)
Reversal, exercised and lapsed options	-	252	-	-	(293)	42	1
Share-based payments	-	-	-	-	4,815	-	4,815
Equity at June 30	27,513	606,169	(619)	(1,282)	23,468	(438,619)	216,630
H1 2024
Equity at January 1	22,544	343,064	(2,110)	(271)	10,707	(262,224)	111,710
Result for the period	-	-	-	-	-	(67,245)	(67,245)
Total other comprehensive income	-	-	-	400	-	-	400
Total comprehensive income for the period	-	-	-	400	-	(67,245)	(66,845)
Transactions with shareholders
Issue of shares	2,360	142,431	-	-	-	-	144,791
Transaction costs	-	(5,188)	-	-	-	-	(5,188)
Increase (decrease) through treasury share
transactions	-	-	1,491	-	-	-	1,491
Reversal, exercised and lapsed options	-	718	-	-	(859)	(46)	(187)
Share-based payments	-	-	-	-	4,707	-	4,707
Equity at June 30	24,904	481,025	(619)	129	14,555	(329,515)	190,479
2024
Equity at January 1	22,544	343,064	(2,110)	(271)	10,707	(262,224)	111,710
Result for the period	-	-	-	-	-	(111,257) (111,257)
Total other comprehensive income	-	-	-	824	-	-	824
Total comprehensive income for the period	-	-	-	824	-	(111,257) (110,433)
Transactions with shareholders
Issue of shares	2,455	143,117	-	-	-	-	145,572
Transaction costs Increase (decrease) through treasury share	-	(5,382)	-	-	-	-	(5,382)
transactions	-	-	1,491	-	-	-	1,491
Reversal, exercised and lapsed options	-	2,263	-	-	(2,660)	(37)	(434)
Share-based payments	-	-	-	-	10,899	-	10,899
Equity at December 31	24,999	483,062	(619)	553	18,946	(373,518)	153,423

NOTES TO THE FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

The interim condensed consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and additional Danish disclosure requirements for listed companies.

All new or amended standards (IFRS) and interpretations (IFRIC), as adopted by the EU and effective for the financial year beginning on January 1, 2025, have been adopted. The implementation of these new or amended standards and interpretations had no impact on the interim condensed consolidated financial statements.

The accounting policies are consistent with those applied to the consolidated financial statements for 2024.

The consolidated financial statements for 2024 contain a full description of accounting policies.

The interim condensed consolidated financial statements

The interim condensed consolidated financial statements comprise the parent company, Napatech A/S, and its subsidiary. The subsidiary is fully consolidated from the date of acquisition and/or incorporation, the date on which the parent company obtains control, until such control ceases. The subsidiary's financial statements are prepared for the same reporting period as the parent company's financial statements, using consistent accounting policies. The consolidated financial statements are prepared by consolidating the financial statements of the parent company and the subsidiary, eliminating all intragroup balances, transactions, unrealized gains and losses, and dividends.

The interim condensed consolidated financial statements are prepared on a historical cost basis.

The interim condensed consolidated financial statements are presented in thousand Danish kroner (DKK'000).

2. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES, AND ASSUMPTIONS

The preparation of the interim condensed consolidated financial statements requires the Management to make judgments, estimates, and assumptions that affect the reported revenues, expenses, assets, and liabilities.

The accounting judgments, estimates, and assumptions that Management makes are the same for these interim condensed consolidated financial statements as for the consolidated financial statements for 2024.

3. OPERATING SEGMENTS

The following tables present revenue and gross profit information about the Group's operating segments for H1 2025 and H1 2024, respectively:

Geographical segments

H1 2025

DKK'000	AMERICAS	ROW	CONSOLIDATED
Revenue
Total revenue	43,186	12,234	55,420
- Sales of goods	40,417	11,931	52,348
- Sales of services	2,769	303	3,072
Cost of goods sold	(13,880)	(3,643)	(17,523)
Segment gross profit	29,306	8,591	37,897
H1 2024
DKK'000	AMERICAS	ROW	CONSOLIDATED
Revenue
Total revenue	33,289	11,429	44,718
- Sales of goods	30,834	11,288	42,122
- Sales of services	2,455	141	2,596
Cost of goods sold	(11,828)	(2,389)	(14,217)
Segment gross profit	21,461	9,040	30,501

3. OPERATING SEGMENTS (CONTINUED)

The geographical segmentation is based on the location of the customers. Explanation of abbreviations: AMERICAS = North & South America ROW = Rest of the World

Business segments

H1 2025
DKK'000	SMARTNIC PRODUCTS	ENGINEERING SERVICES	CONSOLIDATED
Revenue
Total revenue	52,991	2,429	55,420
- Sales of goods	52,348	-	52,348
- Sales of services	643	2,429	3,072
Cost of goods sold	(17,400)	(123)	(17,523)
Segment gross profit	35,591	2,306	37,897

H1 2024
DKK'000	SMARTNIC PRODUCTS	ENGINEERING SERVICES	CONSOLIDATED
Revenue
Total revenue	42,645	2,073	44,718
- Sales of goods	42,122	-	42,122
- Sales of services	523	2,073	2,596
Cost of goods sold	(14,217)	-	(14,217)
Segment gross profit	28,428	2,073	30,501

Revenue from Engineering services is considered a separate segment from SmartNIC products due to the difference in economic characteristics and the timing of revenue recognition. According to IFRS 15, revenue from engineering service contracts is recognized in the income statement based on the stage of completion (over time), whereas the majority of revenue from SmartNIC products is recognized in the income statement at a point in time.

The Group monitors the segments' performance at the level of gross profit. All other income statement items, as well as assets and liabilities, are managed on a group basis and therefore not allocated to individual segments.

4. EARNINGS PER SHARE

	H1
DKK'000	2025	2024
Net profit attributable to equity holders of the parent company for basic
earnings and the effect of dilution	(65,143)	(67,245)
	H1
Thousands	2025	2024
Weighted average number of shares for basic earnings per share	101,536	92,703
Effect of dilution:
Share options	-	-
Weighted average number of shares adjusted for the effect of dilution	101,536	92,703
Number of share options with potential effect of dilution:	2,987	3,229

According to IAS 33, the effect of dilution from share options is not allowed to decrease the loss of earnings per share.

5. INTANGIBLE ASSETS

DKK'000	Development projects, completed	Development projects, in progress	Patents	Total
Cost at 1 January 2025	202,647	4,269	5,728	212,644
Additions in the period	-	5,671	-	5,671
Cost at 30 June 2025	202,647	9,940	5,728	218,315
Accumulated amortisation at 1 January 2025	182,883	-	4,686	187,569
Amortisation for the period	9,248	-	187	9,435
Accumulated amortisation and impairment 30 June 2025	192,131	-	4,873	197,004
Carrying amount at 30 June 2025	10,516	9,940	855	21,311

The annual impairment test for the intangible assets will be performed on December 31, 2025. As of June 30, 2025, the Management has assessed that there were no indications of impairment concerning the Group's intangible assets in the reporting period.

6. TANGIBLE ASSETS

DKK'000	Plant and equipment	Leasehold improve ments	Total
Cost at 1 January 2025	19,270	1,998	21,268
Additions in the period	432	123	555
Presentation currency adjustment	(72)	-	(72)
Cost at 30 June 2025	19,630	2,121	21,751
Accumulated depreciation and impairment at 1 January 2024	14,505	1,557	16,062
Depreciation for the period	1,182	77	1,259
Presentation currency adjustment	(62)	-	(62)
Accumulated amortisation and impairment 30 June 2025	15,625	1,634	17,259
Carrying amount at 30 June 2025	4,005	487	4,492

7. INVENTORIES

	30 June	30 June
DKK'000	2025	2024
Consumables and components	18,771	15,793
Finished goods and goods for resale	56,099	37,121
Total inventories at 30 June	74,870	52,914
Carrying value of inventories recognised at fair value	-	-

The cost of goods sold also includes movements in inventory write-down. Movements in inventory write-down are as follows:

DKK'000	2025	2024
Inventory write-down at 1 January	3,090	1,908
Inventory write-down for the year	-	144
Reversal of inventory wirte-down	(243)	(35)
Inventory write-down at 30 June	2,847	2,017

The reversal of inventory write-down relates mainly to products sold in 2025.

8. ISSUED SHARE CAPITAL AND RESERVES

Authorised shares	2025	2024
	Thousands	Thousands
Ordinary shares of DKK 0.25 each at 1 January	99,997	90,175
Increase in ordinary shares DKK 0.25 each	10,057	9,440
Ordiniary shares of DKK 0.25 each at 30 June	110,054	99,615

9. TREASURY SHARES

Treasury shares have been acquired to settle share options in the Group's share option program.

10. COMMITMENTS AND CONTINGENCIES

Collaterals

The Group has issued a floating charge of DKK 40 million secured on receivables, inventories, patents, and plant and equipment as collateral for loans.

Napatech A/S

Tobaksvejen 23A, 1 DK-2860 Søborg Denmark CVR no. 10109124

Phone: +45 4596 1500

www.napatech.com